The ECB’s increasingly shrill mantra that it makes policy for the monetary union as a whole and not for its largest member (Germany) could well cause a black swan to appear — in the form of a German political shock this autumn. The Frankfurt-based officials have been ignoring the historical observation of Nobel Prize-winning economist Robert Mundell that central banks of federal unions are intuitively alert to symptoms of monetary instability in their dominant economic member — for example: Ontario in Canada and New South Wales in Australia. (California, at around 13% of the US economy does not qualify as “dominant.”)
We are accustomed to looking at Europe’s woes in a purely financial context. This is a mistake, because it misses the real reasons why the EU will fail and not survive the next financial crisis. We normally survive financial crises, thanks to the successful actions of central banks as lenders of last resort. However, the origins and construction of both the the euro and the EU itself could ensure the next financial crisis commences in the coming months, and will exceed the capabilities of the ECB to save the system.
Can the EU still unite a continent shattered by world wars, or is it little more than a vehicle for austerity capitalism? The European Union is one of the premier trade organizations on the planet, with a collective GDP that surpasses the world’s largest national economies.
But it’s far more than a trade group. It’s also a banker, a judicial system, a watchdog, a military alliance, and — increasingly — an enforcer of economic rules among its 28 members. “Larger now than the Roman Empire of two thousand years ago,” observes British historian Perry Anderson, “more opaque than the Byzantine, the European Union continues to baffle observers and participants alike.”
Alexis Tsipras had a choice. As the leader of the fledgling Syriza government in Greece, he could have told the European Union to stuff its austerity plan. He could have taken the risk that the EU would offer a better deal to keep Greece in the Eurozone. Or, failing that, he could have navigated his country into the uncharted waters of economic independence.
The direct costs of World War I to the United States were: 130,000 combat deaths; 35,000 men permanently disabled; $33.5 billion (plus another $13 billion in veterans' benefits and interest on the war debt, as of 1931, all in the dollars of those years); perhaps also some portion of the 500,000 influenza deaths among American civilians from the virus the men brought home from France.
By the fall of 1944, it was obvious that the war in Europe was in its final year. In France, British and American forces had broken out of Normandy and were driving toward Paris and the Rhein. In the East, the Soviet Army was expanding its control westward across Europe. All over the Continent, Allied domination of the air was complete, and in the North Atlantic the back of the German U-Bootwaffe was finally broken.
"Honest and idealist ... enjoys good food and wine ... unprejudiced mind ..."
That's how a 1952 Central Intelligence Agency (CIA) assessment described Nazi ideologue Emil Augsburg, an officer at the infamous Wannsee Institute, the SS think tank involved in planning the Final Solution. Augsburg's SS unit performed "special duties," a euphemism for exterminating Jews and other "undesirables" during the Second World War. Although he was wanted in Poland for war crimes, Augsburg managed to ingratiate himself with the U.S. CIA, which employed him in the late 1940s as an expert on Soviet affairs. Recently released CIA records indicate that Augsburg was among a rogue's gallery of Nazi war criminals recruited by U.S. intelligence agencies shortly after Germany surrendered to the Allies.